You might think the biggest breakup in tech history was Bill and Melinda Gates,
but the one we just saw between EVGA and NVIDIA has to be in the top five.
EVGA recently announced that they would completely stop producing and selling
NVIDIA-based graphics cards. Huge news, considering EVGA owned 40% of the North American
market share for NVIDIA GPUs. With graphics cards being as coveted and expensive as they are,
why the heck did EVGA decide to kill this seemingly golden goose? I mean, do they not like money?
We reached out to EVGA to get some more details, but unsurprisingly, they didn't want to give
more details other than the public statements they've already made. But still, we'd like to
thank Jacob Freeman for sending us a rejection message that was nicer than anything I've ever
gotten on Tinder. I've never been on Tinder, but that's John speaking. But the good news is,
we're not totally in the dark about what's going on, so let's get started by pointing out
the graphics card business actually isn't as lucrative as you might think it is. Despite the
high prices for premium models and the high demand we saw during the pandemic, AIB partners,
like EVGA, ASUS, Gigabyte, and many others, are usually only running profit margins somewhere
between 5 and 10% on their graphics cards. After all, they have to pay lots of money to
NVIDIA and AMD for the GPUs themselves. And a recent report indicated that despite the fact
that EVGA has long been considered part of the upper echelon of graphics cards manufacturers
in terms of support and overall quality, their margins actually lagged behind most of their
competitors because they outsourced much of the actual manufacturing, meaning EVGA's operations
mostly consisted of just engineering the cards while others physically assembled them. And
although outsourcing is usually associated with cutting costs, it appears that in this case,
EVGA sacrificed money for convenience and scale. And remember how we just mentioned EVGA's support?
The company was rather generous with its warranty and repair policies, which was great for consumers,
but also likely cut into the company's already narrow margins even further, especially as they
didn't sell at the same volumes as some of their competitors, as many of these other companies have
a more global reach and also sell AMD Radeon based cards. So this at least partially explains why
EVGA is getting out of the graphics card business entirely, but not about the reported specific
beefs they had with NVIDIA as a partner. Consumers won't be strangers to how NVIDIA's pricing is
famously hard to predict, with announcement day MSRP's often differing significantly from projections
by the tech media. But it might come as a surprise that AIB partners also find out official pricing
around the same time as you and me at home do. And by then, the cards are already in production
without the AIB partner even knowing how much money they owe NVIDIA. Not to mention that NVIDIA is
rather strict about designs it allows AIB partners to create. And while it may help protect stability
and consistency across the product lineup, regardless of who you buy your graphics card from,
and may stop AIB's from designing something overly exotic that ends up not working well and
hurting NVIDIA's reputation, it also hamstrings the AIB's ability to innovate and set themselves
apart from each other. So while both sides seem to have valid concerns, at the end of the day,
a smaller company like EVGA was taking huge losses on higher-end cards, especially as they compete
against NVIDIA's own Founders Edition cards, which are the cheapest on the market, and the
models that consumers who simply want a GPU without extra bells and whistles and dragon
decals will gravitate towards. Needless to say, the opaque pricing and the fact that they were
getting undercut by NVIDIA itself left EVGA feeling more than a little miffed, and left them without
much of a reason to carry on with their graphics card business in the wake of both the crypto crash
and the higher production costs, and thus even thinner margins, of the new RTX 4000 series.
Unlike many of their competitors, which make both NVIDIA and AMD-based graphics cards,
EVGA exclusively made GeForce products, so they don't have a radion lineup to fall back on,
and even if they did, they'd still be facing the same issues we mentioned in the first half of
this video. The good news for EVGA is that they have a successful power supply business that has
much higher profit margins that the company reportedly plans to soldier on with. But if you
had your heart set on a FTW love lace card for your next gaming rig, sadly, you're just gonna
have to take the L. Hey, and thanks to you for taking this train all the way to the end of the
video, the video train. Like the video if you liked it, dislike it if you disliked it, check out
our other videos, comment below with video suggestions, and don't forget to subscribe
and follow. I've talked to you so much about this, and frankly, I'm sick of it.